Business
South Africa’s rand weakens to record low after minister’s sack
South Africa’s Rand weakened early on Thursday, edging towards a record low after President Jacob Zuma removed Finance Minister, Nhlanhla Nene.
The currency dropped by 0.61 per cent to 15.07 per dollar compared to its close of 14.98 in New York.
Nene’s dismissal sent the Rand to a record low of 15.30 as sentiment soured in an economy that is barely growing.
The slow growth is squeezed by low commodity prices globally and the near certainty of an interest rate rise in the United States, next week.
“The timing of this decision and what it entails is very negative for the Rand and credibility of the Finance Ministry and sound financial institution framework,” said Standard Bank trader, Oliver Alwar.
“Investor sentiment will struggle given its timing so soon after ratings agencies met last Friday,” he said.
Fitch downgraded South Africa’s economy to just one notch above sub-investment grade last Friday.
Government bonds, however, held on to their gains, with the yield on the benchmark paper due in 2026.
It shed 0.05 basis points to 8.83 per cent, a level last seen in February, 2014.
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